[Infowarrior] - AT&T, Verizon, Qwest Can Bid on $20 Billion USG Contract

[Richard Forno]

AT&T, Verizon, Qwest Can Bid on $20 Billion Contract (Update2)

By Molly Peterson

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_XnOkroR3GI&refer=home

March 29 (Bloomberg) -- AT&T Inc., Verizon Communications Inc. and Qwest
Communications International Inc. won the right to bid on orders under a
government contract worth at least $20 billion, the biggest-ever federal
telecommunications award.

Sprint Nextel Corp. was denied participation in the biggest part of the
so-called Networx acquisition program, which lasts 10 years, the General
Services Administration said today at a press conference. The decision will
end the Reston, Virginia-based company's 18-year run as a government-wide
contractor.

``It's clearly a disappointment,'' for Sprint, said David Kaut, an analyst
at Stifel Nicolaus & Co. in Washington.

The companies will compete for business from as many as 135 federal agencies
in thousands of locations worldwide. The services provided will cover
everything from Internet-based telephone and video access to data-network
security upgrades.

The announcement marks the first time the U.S. has picked more than two
groups of companies to bid on a government-wide telecommunications contract,
a deal spanning its whole operations. The contract replaces an arrangement
with Verizon and Sprint. San Antonio-based AT&T hasn't held a
government-wide contract since 1999, and Denver-based Qwest has never had
one.

``The three awardees best meet our needs,'' said John Johnson, a General
Services Administration assistant commissioner overseeing the program, in
response to a question about why Sprint wasn't picked.

Shut Out

The program had been especially critical for Sprint, which gets several
hundred million dollars each year for federal network services and has lost
consumer customers in recent months. The company, which runs the
third-largest U.S. wireless service, said in January it plans to cut 5,000
jobs this year as sales trail analysts' estimates.

Sprint said in a statement it will support a bridge contract to continue its
work with government customers for as many as 40 additional months. The
company said it is confident it will be found eligible to bid on a second,
smaller part of the Networx contract that will be announced in May.

Sprint also requested a debriefing with GSA next week and will decide after
that meeting whether it will protest its exclusion, the company said in an
e-mail.

The company's shares pared gains after the announcement, rising 25 cents to
$18.76 at 1:38 p.m. in New York Stock Exchange composite trading after
earlier climbing as high as $18.98. Shares of AT&T rose 4 cents to $38.99,
Verizon shares advanced 12 cents to $37.35 and Qwest shares gained 10 cents
to $8.95.

Lots of Work

The program was designed as a plan to help government agencies upgrade to
Internet-based systems, add more wireless networks and adopt technologies
that will emerge in the next 10 years. The government also wants to tighten
network security and improve agencies' ability to communicate with one
another, particularly during emergencies.

The phone companies say they have spent millions of dollars preparing for
the contract in the past three years, assigning thousands of employees to
the job.

Today's announcement is ``a step in the process,'' said Don Herring,
president of AT&T's government business. ``Lots of work needs to be done for
what happens next.''

Qwest spokeswoman Diane Reberger called the win ``another example of how far
Qwest has come over the past few years.'' Verizon said in a statement that
it has invested in technology to continue its work with federal agencies.

All four carriers formed teams with technology and defense companies to meet
the program's requirements. Sprint had planned to work with a group that
includes Lockheed Martin Corp., while New York-based Verizon teamed up with
Hewlett-Packard Co., General Dynamics Corp. and Computer Sciences Corp.

Northrop Grumman Corp. and Electronic Data Systems Corp. are on AT&T's team,
and Qwest's team includes BearingPoint Inc. and SAIC Inc.

To contact the reporter on this story: Molly Peterson in Washington at
mpeterson9 at bloomberg.net
Last Updated: March 29, 2007 13:40 EDT